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Bank to pump extra cash into money markets
THE Bank of England will today pump an extra 30 billion US dollars (£16.8bn) into frozen money markets in its latest bid to ease the financial crisis.
The funds - available to banks for one week - come on top of 40 billion dollars (22.5bn) injected since last Friday as banks scared of losses hoard cash.
The rate at which banks will lend to each other has soared in the current turbulence, and jumped again yesterday after US plans for a 700 billion US dollar (392bn) bank rescue was voted down on Monday night.
The latest move by the Bank of England comes in a week in which the foundations of the global banking system have been shaken.
Mortgage lender Bradford & Bingley has been broken up and part-nationalised, and there have been state bail-outs and rescue takeovers for banks in Europe and the US.
Yesterday the Irish Government also stepped in to guarantee the deposits of all its indigenous banks, sparking calls for a similar move in the UK.
The Bank has acted after the overnight rate at which banks lend dollars to each other almost trebled to 6.88% yesterday, from 2.57% the previous day.
It will also lend another 30 billion US dollars (16.8bn) on Friday for one week to banks seeking cash.
Despite the billions pumped in by the Bank - and central banks around the world - this week, money market conditions are likely to hinge on the outcome of a fresh vote on revised plans for the US bail-out this evening.
The rescue, which will see US taxpayers' money used to buy up toxic bad debts from banks' balance sheets, has been deeply unpopular in the US.
The measures were narrowly defeated on Monday evening - with many members of the House of Representatives eyeing approaching elections - although President George Bush has warned of "painful and lasting" damage to the US economy if no agreement is reached.
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Weather for Yorkshire
Wednesday 23 May 2012
Today
Sunny
Temperature: 12 C to 25 C
Wind Speed: 12 mph
Wind direction: North
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